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on International Finance |
| By: | Wagner, Joachim (Leuphana University Lüneburg and CESIS, Stockholm); Gelübcke, John P. Weche (Leuphana University Lüneburg, Germany) |
| Abstract: | In this paper we present the first evidence for a link between foreign ownership and credit constraints for Germany, one of the world's leading target countries for foreign direct investment. Furthermore, we contribute to the literature by investigating the impact of a foreign acquisition on the target firms' credit constraints for the first time. We use newly available comprehensive panel data that we constructed from information collected by the German statistical offices and from credit rating scores supplied by the leading German credit rating agency. We ind foreign owned firms in German manufacturing on average to show slightly more financing restrictions than domestically owned enterprises, but this very small difference diminishes once unobserved heterogeneity is taken into account. We further demonstrate that one reason for this finding is the preference of foreign investors for targets with relatively low credit-worthiness. Although the likelihood of a foreign acquisition appears to be correlated with credit constraints, there is no impact of foreign takeovers on the credit constraints of the target firms ex post and therefore no support for the hypothesis that foreign takeovers ease financial frictions. |
| Keywords: | credit constraints; foreign ownership; acquisitions; Germany |
| JEL: | F21 F23 G34 |
| Date: | 2013–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0329&r=ifn |
| By: | Nidhaleddine Ben Cheikh (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie) |
| Abstract: | This paper analyzes the exchange rate pass-through (ERPT) into consumer prices for 12 EA countries within a CVAR framework. Using the Johansen cointegration procedure, results indicate the existence of one cointegrating vectors at least for each EA country of our sample. When measuring the long-run effect of exchange rate changes on consumer prices, we found a wide dispersion of ERPT elasticities, especially between "peripheral" and "core EA" economies. For instance, consumer prices rise by 84% in Portugal following one percent depreciation of exchange rate, while for the German economy the extent of pass-through is not exceeding 0.20%. Besides, the loading factors point out a very slow adjustment of consumer prices towards their long-run equilibrium across EA countries. This would explain the weakness of ERPT estimates in the short-run. |
| Keywords: | Exchange Rate Pass-Through; Inflation; Cointegration |
| Date: | 2013–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00879270&r=ifn |